SBF's political scam

Andrew Ross Sorkin speaks with FTX founder Sam Bankman-Fried during the New York Times DealBook Summit on November 30, 2022 (Photo by Michael M. Santiago/Getty Images)

Former FTX CEO Sam Bankman-Fried, better known as SBF, burst onto the political scene and cast himself as the financial savior of the Democratic Party. In May, SBF said he was prepared to spend up to $1 billion to help Democrats win in 2022 and 2024. 

Like many of SBF's claims, that turned out to be bluster. Public campaign finance filings show that SBF spent just $41 million in the 2022 midterm elections. Much of that was spent propping up unsuccessful Democratic primary candidates, including $11 million to Carrick Flynn, who lost a Congressional primary in Oregon. Still, SBF made substantial donations to Democratic Super PACs, including $6 million to the House Majority PAC, the Super PAC affiliated with Speaker Nancy Pelosi (D-CA). The spending made SBF one of the top two donors to Democrats in the 2022 cycle. (Billionaire George Soros technically spent more, but most of it was donated to Soros' own PAC and not distributed.) 

When FTX collapsed and declared bankruptcy, the media portrayed it as a serious blow to Democrats. 

Even based on public campaign finance reports, this was an oversimplification. SBF donated to Republicans favorable to crypto, including Senator-elect Katie Britt (R-AL), Senator John Hoeven (R-ND), and Senator Lisa Murkowski (R-AK). SBF also donated to the National Republican Campaign Committee, which supports the election of Republicans to the House. Further, another FTX executive, Ryan Salame, publicly donated about $23 million in the midterms, and almost all of it went to Republicans. 

FTX itself donated to a slew of Republican Super PACs just before the election, including $1 million to the Senate Leadership Fund (SLF), $750,000 to Congressional Leadership Fund (CLF), and 150,000 to the American Patriots PAC. These donations would have almost certainly required the approval of SBF, the company's then-CEO.

Now, SBF has admitted that his image as a top supporter of Democratic candidates was a ruse. After FTX's bankruptcy, in a phone interview with crypto content creator Tiffany Fong, SBF said that he gave just as much money to Republicans in the 2022 cycle. SBF just made sure that those donations were secret. 

I donated about the same amount to both parties this year. That is not generally known because, despite Citizens United being literally the highest-profile Supreme Court case of the decade and the thing everyone talks about when they talk about campaign finance, for some reason, in practice, no one can possibly fathom the idea that someone in practice actually gave dark. All my Republican donations were dark. And the reason was not for regulatory reasons. It's just reporters freak the fuck out if you donate to a Republican. They are all secretly liberal and didn't want to have that fight. So I made all the Republican ones dark.

If SBF is telling the truth, it would make him one of the Republicans' top donors. Since much of SBF's spending on behalf of Democrats went to failed Democratic primary candidates, it's possible that SBF spent significantly more helping Republicans than Democrats in the general election.

SBF blames "reporters" for his deception, but he chose to hold himself out as someone who was willing to spend $1 billion to elect Democrats. That generated an enormous amount of media coverage and raised the profile of FTX. All the while, he was engaged in the much more mundane task of buying influence from both parties. How did SBF do it? 

The top Super PAC for Republican Senate candidates was Mitch McConnell's SLF. But the largest donor, by far, to the SLF is One Nation. Through September 30, 2022, One Nation donated $53.5 million to the SLF. Like the SLF, One Nation is run by Steven Law, a former Chief of Staff to McConnell. But unlike the SLF, One Nation is organized as a 501(c)4 non-profit organization and can keep its donors secret. One Nation can collect unlimited donations from people like SBF, keep their identities secret, and then pass the money on to the SLF. The top Super PAC for Republican House candidates, CLF, also has an affiliated non-profit, the American Action Network, that operates the same way. 

The truth about SBF's political spending is an example of his duplicity. But, more importantly, it illustrates how the public has no idea who is actually funding candidates in the United States. The largest sums of money spent on elections come from anonymous donors. Making disclosure effectively optional allows unscrupulous individuals like SBF to manipulate public perception.

The DISCLOSE Act is one solution to this problem. It would require "organizations spending money in elections – including super PACs and 501(c)(4) dark money groups – to promptly disclose donors who have given $10,000 or more during an election cycle." If the DISCLOSE Act was law, SBF's donations to all candidates would be public. The bill would also "crack down on the use of shell corporations to hide the identity of the donor by requiring companies spending money in elections to disclose their true owners."

The Senate brought the DISCLOSE Act up for a vote in September. All Democratic members voted for it, and all Republican members opposed it. Since the bill required 60 votes to pass, it failed. 

"The American people are fed up with dark money influence campaigns that rig their government against them and stymie their priorities," Senator Sheldon Whitehouse (D-RI), who sponsored the legislation, said. "The DISCLOSE Act would shine a light on special interest spending to neutralize its toxic effect, giving Americans’ voices a chance to be heard.  Republicans heeded the wishes of dark money donors today, but the fight to pass this bill isn’t over."